Aptitude - Simple Interest - Discussion

Discussion Forum : Simple Interest - General Questions (Q.No. 7)
7.
An automobile financier claims to be lending money at simple interest, but he includes the interest every six months for calculating the principal. If he is charging an interest of 10%, the effective rate of interest becomes:
10%
10.25%
10.5%
None of these
Answer: Option
Explanation:

Let the sum be Rs. 100. Then,

S.I. for first 6 months = Rs. 100 x 10 x 1 = Rs. 5
100 x 2

S.I. for last 6 months = Rs. 105 x 10 x 1 = Rs. 5.25
100 x 2

So, amount at the end of 1 year = Rs. (100 + 5 + 5.25) = Rs. 110.25

Effective rate = (110.25 - 100) = 10.25%

Discussion:
118 comments Page 3 of 12.

Himika said:   1 decade ago
Hows it possible to solve without time?
(1)

Sushmita said:   1 decade ago
SI for 1 year =10.25
10.25=100*R*1/100
=10.25
Hence r=10.25
(1)

Manish Kumar said:   7 years ago
The rate is always annual(Not necessary to mention).

If it is not mentioned then we have to understand it is 10 p. a.

But in this question interest is calculating at every six months so rate (10/2 =5%).
So, Rate is 5 % for six months,
Now, financier includes interest after 6 months that means He will give interest on the interest that means he will give interest 5% on 5.

So, it is 5*5/100=0.25,
one year interest =5+5+=10%,
But effective interest =10+0.25=10.25,
(here 0.25% is interest on interest)

Doesn't matter if you are taking p=100 or p=200 or p=10.
But interest is always on 100.

If it is given 5% then it means we got an interest of rupees 5 on rupees 100.

If you are taking p=200 and rate is unchanged (5%) then we got 10 rupees interest on 200.
In this case, we are also getting 5 rupees on every 100 rupees.
So in this question, you take principle 100 /200/10 but we get effective interest =10.25.
(1)

Pratik Jadhav said:   4 years ago
How can you add, the interest calculated for the first six months to the principal value to calculate interest for the last six months?

I thought in simple interest we consider only the principal amount and not the interest associated with it from the previous months.

Please clear this to me.
(1)

Nila Maity said:   2 years ago
It's very helpful for me, Thanks.
(1)

Kalam said:   1 decade ago
Time should be mentioned here.

Or have to say that at the end of year.

Varun said:   1 decade ago
I am not getting that why are they multiplying 2 in the first 6 and in last 6 months ? Can any one provide me with the full and correct explanation for this?

Devi said:   1 decade ago
For half of the year we take 1/2 (for 6months) and also by adding another 1/2 for next 6 months we get the total amount for a year.

Varun Mathur said:   1 decade ago
How did they got 105 and why are they multiplying it 2?

Please explain me.

Sumit said:   1 decade ago
S.I is always calculate on original sum. But here the last six month S.I is calculate on Amount at the end of 1st 6 month. Is'nt this is the concept of C.I not of S.I ?


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